Modelling Consumer Evaluation of Brand Extensions: Empirical Evidence from India

Increasing costs involved in building new brands motivate marketers to adopt an alternate route for new product introductions in the form of brand extensions. While extensive research exists for understanding the intricacies of brand extensions in the Western context, there is limited understanding about its utility in the context of developing countries such as India. This study aims to identify factors contributing to the success of brand extension of Consumer Packaged Goods (CPGs) in India. Primary data collection was performed with 837 participants constituting management students of a renowned university in India. Hierarchical regression is applied to model the variables considered as major determinants for brand extension evaluation. This study is first of its kind in India explaining the inter-relationships among these variables with the help of residual centring technique for creating interaction terms leading to a better understanding of consumers’ evaluation of brand extensions. Interesting results emerging from the study, having managerial implications, are discussed in detail. Attitude towards brand extension advertisement is found to be the most significant variable affecting consumers’ attitude towards brand extension. While a majority of the prior studies has overstated the impact of perceptual fit, it only emerged as a significant variable along with brand trust and perceived quality. Negative interaction effect of perceived fit and trust is observed, implying that only strongly trusted brands may extend into low fitting product categories and vice versa, that is, lowly trusted brands should only extend into high fitting extensions. We believe that these implications will be useful for many of the multinational companies entering Indian markets while leveraging their equity by introducing extensions that are suited for the Indian consumers.